GST impacts almost all types of industries, and professional are no exception. Until recently, professionals enjoyed the benefit of centralised service tax registration for all their offices located across India. However, with advent of GST, professionals operating from multilocation office will have to obtain state-wise registrations.
The compliance and report ing requirements for professionals will also increase under GST. Under the erstwhile service tax regime, professionals could file half-yearly service tax returns requiring disclosure of the revenue and eligible input tax credit on an aggregate basis.
However, under GST they need to file monthly GST returns with disclosure of invoice level details for all their sales and purchase. Also, for professionals operating as individuals and partnership firms doing away with the option of quarterly tax payment, it increases the need for additional working capital.
While the government has provided a composition scheme for small manufacturers/traders up to an annual turnover of Rs 75 lakh, however, such an option is not extended to the professional service providers.
Though the tax rate under GST has increased from 15% to 18%, there’s good news for professionals, as they will now be entitled to higher input tax credit due to withdrawal of non-creditable state taxes such as VAT/CST/entry tax/octroi on procurement of goods and certain cesses levied by central government.
The place of supply was not too relevant for professional s under service tax law (except for import and export), but they will now be required to change their IT system to map the place of supply for each supply of services (intra-state and interstate) and set up the reporting requirement accordingly. Besides the above compliances, professionals will also have to comply with reverse charge provision in case of purchases from unregistered dealers.
Overall, it appears that GST has a mixed impact on professionals with both positives and negatives.
(The author is Partner and Head, Indirect Tax at KPMG in India)